Financial Results March 2018 Investor Presentation 0
Key Highlights Consolidated PBT for Q1 18 is Rs 7.4 bn compared to Rs 14.1 bn in Q1 17 Domestic PBT is Rs 3.6 bn lower YoY at Rs 9.7 Bn, mainly due to Impact of pensions charge (one-off) Rs 2.2 bn Impact of Rupee devaluation on foreign currency borrowings Rs 1.1 bn Excluding these, normalized PBT is Rs 0.3 bn (2%) lower YoY, mainly due to non-recurring capital gains of Rs 0.7 bn on fixed income bonds in Q1 17 International business incurred a loss of Rs 2.4 bn in Q1 18 vs a profit of Rs 0.7 bn in Q1 17. Significant decline in revenue as a result of Balance Sheet shrinkage post de-risking, while cost reduction will only occur with a lagged effect Higher cost incurred in relation to New York branch. Net interest income of Rs 19.93 bn in Q1 18 is slightly lower than the Rs 20.13 bn in Q1 17 Domestic NII increased by 3% over Q1 17, driven by a 12% YoY growth in average balance sheet Average total domestic deposits have grown by Rs 186 bn (13%), largely driven by growth in CASA deposits (Rs 157 bn) Average domestic advances grew by 29% (Rs 156 Bn) YoY, mainly driven by growth in Corporate and Islamic lending However, spreads have reduced by 27 bps YoY to 3.1%, mainly due to a decline in investment yields resulting from the sale of higher yielding PIBs in 2017. 1
Key Highlights Non markup income is at Rs 5.2 Bn, Rs 3.1 Bn lower than in Q1 17 Domestic fees up 5% despite a significant drop in home remittances income. Excluding this, domestic fees have grown by 12% led by account operations, cards and consumer financing FX loss of Rs 0.7 bn in Q1 18 is mainly as a result of Rs 1.1 Bn impact of rupee devaluation on foreign currency borrowings Capital gains are nominal in Q1 18 compared to Rs 1.2 Bn in Q1 17. Administrative expenses (Ex - pensions charge) are up 13% YoY The growth is mainly due to higher expenses related to New York and costs of the Bank s on-going business and compliance transformation program. Excluding the impact of these, expense growth has been contained to single digits Provisions Gross NPLs have increased by Rs 0.5 Bn over Dec 17, due to a Rs 1.5 Bn impact of currency devaluation on overseas NPLs However, asset quality remained flat at Dec 17 level of 8.2% In Q1 18, there is a provision reversal of Rs 111 mn compared to a charge of Rs 359 mn in Q1 17 The coverage ratio stood at 90.5% in Mar 18 (Dec 17: 91.6%) 2
Key Highlights Total deposits increased by 2% over Dec 17 to Rs 2.0 trillion. Domestic deposits grew by 3% (Rs 47 bn) and crossed Rs 1.8 trillion, with market share improving to 14.4% in Mar 18 Domestic CASA deposits grew by Rs 43 bn, with the CASA ratio improving to 86.5% Average domestic current deposits have increased by 17.1% (Rs 86 Bn) over Q1 17 The cost of domestic deposits has increased by 11bps YoY to 2.78% in Q1 18. Net advances increased by 1% over Dec 17 to Rs 860 Bn Domestic advances have grown by 3.7% (Rs 26 Bn) to Rs 727 Bn Overseas advances have declined by 17.8% ($ 218 mn) to $ 1.0 Bn 3
Balance Sheet PKR Bln Mar'18 Dec'17 Var% Cash & Bank Balances 298.8 286.8 4% Lending to Financial Institutions 144.1 33.9 325% Investments 1,126.4 1,374.8-18% Performing Advances 853.2 845.2 1% Non Performing advances - net of provision 7.3 6.3 15% Net Advances 860.5 851.5 1% Others 130.9 137.0-4% Total Assets 2,560.7 2,684.1-5% Deposits - Domestic 1,809.7 1,762.3 3% Deposits - FMFB 22.6 20.9 8% Deposits - International 199.5 215.8-8% Total Deposits 2,031.8 1,998.9 2% Borrowings 225.7 397.8-43% Subordinated loan 10.0 10.0 0% Others 97.1 88.6 10% Total Liabilities 2,364.6 2,495.3-5% Shareholders' equity 171.9 163.9 5% Non - controlling interest 3.7 3.5 6% Surplus on revaluation of assets - net of tax 20.5 21.4-4% Total Liabilities & Equity 2,560.7 2,684.1-5% 4
PKR Bln % coverage ratio Loan portfolio composition by line of business Net Advances International Advances Location wise International 13.6% Mauritius 2.1% Bangladesh 4.7% Others 12.6% UAE 26.4% Others 15.4% Net loans: PKR860Bn Corporate 50.1% Bahrain 13.3% Net loans: PKR117Bn Consumer 5.3% Coverage ratio Agriculture 3.7% Commercial 5.8% Retail 6.2% Oman 9.6% Asset quality Singapore 5.5% United Kingdom 25.8% 100 90 80 70 60 84% 83% 90% 91% 92% 90% 100% 95% 90% 85% 80% 12.7% 12.0% 10.9% 9.2% 8.2% 8.2% 50 75% 40 30 80 80 77 75 76 76 67 66 69 69 70 69 70% 65% 20 60% 10 55% - Dec'13 Dec'14 Dec'15 Dec 16 Dec 17 Mar'18 NPL Provision Held Coverage 50% Dec'13 Dec'14 Dec'15 Dec '16 Dec'17 Mar'18 5
Deposits Period End Deposits Average Deposits PKR Bln Mar'18 Dec'17 Var% PKR Bln Q1-18 Q1-17 Var% Current 639.8 627.8 2% Current 590.4 504.3 17% Saving 925.2 894.3 3% Saving 860.3 789.2 9% Term 244.8 240.2 2% Term 213.8 184.9 16% Domestic 1,809.7 1,762.3 3% Domestic 1,664.5 1,478.4 13% FMFB 22.6 20.9 8% FMFB 21.7 11.8 84% International 199.5 215.8-8% International 204.2 292.9-30% Group 2,031.8 1,998.9 2% Group 1,890.3 1,783.0 6% CASA Ratio - Dom 86.5% 86.4% 0.1% Cost of deposits - Dom 2.78% 2.67% + 11bps CASA Ratio - Group 83.8% 83.5% 0.3% Cost of deposits - Group 2.63% 2.41% + 22bps Deposits Composition Growth in current deposits PKR Bln 26.7% 21.9% 17.5% 17.7% 16.5% 16.2% 698 733 740 43.9% 43.9% 45.8% 45.3% 46.8% 47.4% 522 600 29.4% 34.2% 36.7% 37.0% 36.7% 36.4% 411 Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 Mar 18 Current Saving Term Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 Mar 18 6
Income Statement PKR Bn Q1 2018 Q1 2017 Var% Interest Income 37.0 34.9 6% Interest expensed (17.1) (14.8) -15% Net Interest Income 20.0 20.1-1% Non Interest Income 5.2 8.3-38% Gross Revenue 25.1 28.4-12% Admin Expenses (17.7) (13.8) -29% Operating Expenses (17.9) (14.0) -27% Pre Provision Operating Profit 7.3 14.4-50% Provisions 0.1 (0.4) 131% Profit Before Tax 7.4 14.1-48% Tax (2.7) (5.0) 46% Profit After Tax 4.7 9.1-48% 7
Key Ratios Ratios Mar'18 Dec'17 Advances : Deposits 45.7% 46.1% Asset Quality 8.2% 8.2% Coverage 90.5% 91.6% Capital Adequacy - Tier I 12.3% 12.0% Capital Adequacy - Total 16.5% 16.0% Ratios Q1 2018 Q1 2017 Yield on advances 7.9% 7.5% Cost of deposits 2.6% 2.4% Net Interest Margin 3.9% 4.0% Spreads 3.1% 3.4% NCL ratio -0.1% 0.1% Return on average assets 0.7% 1.4% Return on shareholders' equity* 10.9% 20.9% Cost : Income ratio 70.5% 48.4% NFI : Gross revenue 20.6% 29.2% * excluding surplus on revaluation 8